Sharia's Case

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Questions 1) Identify specific financial statements auditing concepts and procedures that could be applied in determining whether an Islamic bank has been Shari’a compliant during a given financial reporting period?

* Cultural differences across countries and regions of the world have complicated efforts to develop a common set of international accounting and auditing standards. * Islam accepts the fact that accounting is a social construction and itself constructs social reality but this reality which the accounting constructs must conform to the dictates of Islamic belief. * Most Islamic banks have their annual financial statements audited by an independent accounting firm. * An SSB (shari’a supervisory board) is a
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2) Do you believe that the proposal to merge shari’a compliance audits with financial statement audits is feasible?

Yes, there are many arguments that support that this merge between shari’a compliance audits and financial statement audits is possible: the effectiveness of the shari’a compliance function is being undercut by the lack of formal training in auditing concepts and auditing methodologies on the part of the religious scholars principally responsible for that function.

3) Do you agree with the assertion that accounting can lead to perceptions of reality? Explain. In deciding whether to adopt a proposed accounting standard, should accounting rule making bodies consider whether that standard might induce socially irresponsible behavior on the part of economic decision makers?

Islam accepts the fact that accounting is a social construction and itself constructs social reality but this social reality which the accounting constructs must conform to the dictates of Islamic belief.

A rule making body issues authorative shari’a auditing standards for all Islamic banks and other Islamic businesses and it will be the most effective way to eliminate problems within the Islamic economy. The most effort to develop a body of consistent standards for shari’a audits has been undertaken by
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